Recession-Proof Your Marketing BudgetJun 30, 2022
3 Steps to Demonstrate Budget Efficacy in the Face of a Potential Recession
Everyone is talking about a potential recession, especially marketers who have spent the last couple of years experiencing cuts to their budgets. Gartner found that marketing budgets for B2B companies have decreased since 2020, from an average of 11% of revenue to 6.4% of revenue.
Now, as we face exceptionally high inflation and a potential recession, marketers are understandably wary and looking for ways to recession-proof their marketing strategies and maintain their already dwindling budgets. But how can this be done?
In this article, we will look at what changes when marketing during a recession and delve into how to utilize your budget efficiently, prove efficient budget usage, and how Kudoz can help.
The Power of Marketing is Undeniable
Marketing drives growth - prove it to your CFO
The future of marketing is now! The data says so, too. 83% of CEOs see marketing as their number one growth strategy while 70% of B2B Decision Makers prefer remote human interaction or digital self-service.
Yet marketing struggles to prove its impact to CFOs
Marketing budgets are often among the first to go when companies need to trim costs. Why? Because 40% of CFOs don’t think marketing investments should be protected during a downturn. They view marketing expenses as unnecessary costs, and if times get tough or a company's business plan adjusts, then chances are there will be an audit of every marketing expense for the previous fiscal year.
To prove the point, only 50% of CFOs believe marketing is driving growth.
The impact of this is so much that if CFOs supported marketing, marketing would be 75% more likely to preserve its budget in difficult times. Let’s take a step back and talk about the scrutiny one will encounter heading into a recession.
What changes while marketing in a recession?
Track every single budgeted dollar
During a recession, marketers need to look not only at the outcome of their strategies but also at the cause. While great results from a strategy are important, during a recession, budgeting every dollar effectively is the key to success, whether you see a budget cut or not. By fully understanding the initiatives' outcome and dialing into what specific aspects of those initiatives are working, you can better leverage your budget to capitalize on the positive results. Doing this will also allow you to defend your budgets – because you will be able to explain why you're putting your budget towards specific things and moving away from others.
Financial analysis is key
Again, knowing where every dollar of your budget is going is crucial. Just like you would track your personal budget the marketing budget also needs to be tracked. You should be able to conduct side-by-side comparisons of your sales data, total marketing budget, and marketing performance.
Of course, these things are great practices for when we aren't facing a pandemic… but it is easy to get lost in the day-to-day business and lose sight of the big picture. When preparing to face a pandemic, you can't get lost in the day-to-day details and forget the big picture. By analyzing your budgets side-by-side, you will see the bigger picture and will gain crucial insights into where your marketing dollars are best maximized going forward.
Make the most of every dollar by budgeting efficiently
Keep track of all your marketing budgets
In case we haven't said it enough yet, during or while approaching a recession, knowing exactly where your budget is going is the most important component.
Missing dollars, unused dollars, and mismanaged dollars are all detrimental to your marketing efforts and can easily result in a further decreased budget. If stakeholders can't trust you to optimize the budget you're given, they aren't going to be keen to give you more.
It isn't uncommon for department silos to result in work done more than once. When you begin tracking your marketing budget, check to see if this is the case. If it is, dollars can be stuck between these silos with no clear destination. Dollars may also be spent by two or more departments for essentially the same projects or expenses. By uncovering these sorts of budgetary issues, you can easily free up precious marketing dollars that can be used to drive revenue.
Check your software subscriptions
Another important tip that many don't think about is checking your subscriptions to the various software you use to make sure you're only paying for what you are using. Perhaps your SEO software is on a month-to-month basis, and you're paying for the premium version but actually only need their basic version – checking usage like this can easily free up dollars in your budget that were otherwise not helping.
On the flip side of this, make sure you are investing in software at the proper cost level that will help you to optimize your marketing budget and strategies. Software can be incredibly helpful for lead generation, data analysis, and targeted marketing – all things that drive revenue. So, continue investing in these. But also, be open to adding additional subscriptions that can help all these items become more efficient.
Adopt Kudoz for optimal reporting and budget analysis
Adopting the Kudoz app into your Salesforce platform helps resolve data quality issues to close gaps and streamline marketing efforts, accelerate month-end reporting and quarterly business reviews, and can also help build trust between stakeholders and yourself through integrated reporting on your marketing strategy's impact on lead generation and revenue growth.
The key is optimization. To prepare for a recession, you must optimize your budgets, marketing plan, and marketing tools to drive the most revenue and see the greatest ROIs.
Justify your spending to protect your budget
Make your Case for Marketing Investment
Let's take a moment to imagine the following scenario: you are a marketing manager, and your CMO or a stakeholder comes to you and tells you that they need to cut costs, and marketing will be one of the departments affected. Your first thought is to disagree with this and show how your budget is necessary. However, you can't actually pinpoint where every dollar is going, and while you know your efforts are successful overall, you're not sure what about your strategy is working the best and what isn't. Because of this, you can't compile a strong argument against the budget cut, and so your budget is cut.
Now, imagine the same scenario, except this time, when the CMO or stakeholder approaches you, you can respond back with, "While I appreciate that cuts must be made, I would love to take 10 mins to show you our data and how we are utilizing every single marketing dollar to drive $xxxxx revenue and convert xxx number of leads for an XXX% return on ROI." Not only will this response mean you are more likely to keep your marketing budget, but it will also indicate you have an excellent handle on your overall and specific budgets and are optimizing those dollars to max efficiency.
Know what areas you can cut if you need to cut
While this response could result in your budget remaining intact, if the situation proves worse than anticipated, then you might need to cut something to show you're a team player and can sacrifice for the betterment of the company (and so your team can keep their jobs).
In this case, it is a good idea to know what aspects of your budget you can cut if you need to. Again, this might mean taking a look at your current subscriptions to make sure you need all the components you are paying for. During the pandemic, conference and event budgets were easy to cut as no one was doing these; if your company still hasn't, then keep that budget low. You can also consider converting potential in-person events to webinars for a broader reach and a much cheaper alternative to in-person.
It's essential to partner early on with your CFOs as they may unlock incremental budget to drive revenue growth or any sales pipeline gaps. Share your updates to your Financial team in the place they communicate the most.
In addition, optimize the digital channels used to reach your audience. If there are one or two that do not perform well and do not drive positive results, consider cutting them for the time being. By doing so, you will free up dollars that can either be cut or directed to avenues that do drive positive results.
Flexibility is essential to surviving a recession
How to Succeed when Budgets are Tight
Ultimately, despite what we may want or think is the right choice, sometimes the hard decisions must be made. Recessions are stressful for everyone, and it is easy to feel threatened when budgets must be cut. However, remember that a budget cut doesn't mean you haven't done your job well or that your position is in jeopardy. On the contrary, you may find that a budget cut is the right choice because buying has slowed down. If buyers are simply not buying currently, then expensive 1:1 account-based marketing campaigns and other targeted activities would have no chance of success.
Understanding this will help you know where else you can cut your budget and how best to allocate the dollars remaining. If you hire freelancers for content writing, perhaps you depend on the best one or two writers and cut the rest, so you still have consistent content but at a slower pace to match your changed marketing strategy.
Monopolize your data!
Uncover Hidden Revenue
The analytical insights from an app, such as Kudoz, are critical to recession survival. Efficiency is key and that can only be mastered if your data is clean, properly analyzed, and easy to access. Without clean data, time and resources are wasted trying to clean it to gain helpful insights. Going back to the scenario above, the ability to point to where your marketing dollars are going and how they are leveraged to drive ROI and revenue growth will help immensely when facing budget cuts.
As an added bonus, this will also impress the stakeholders and indicate that you are in control of the budget and know how to maximize it. Down the line, when we come out of recession, they will remember this, and advocating for a budget increase will be easier to do because they will already know that you can manage it efficiently to drive results.
Kudoz the Opportunity Analyzer App, simplifies data-related activities when using Salesforce by identifying missing contacts, lead sources, and other data issues to improve your speed-to-value, analysis speeds, and the overall analytics insights gained. By using Kudoz with your Salesforce CRM you will have powerful insights at your fingertips that you can leverage when speaking with stakeholders.
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